NEW YORK—Crude futures fell slightly, taking a pause after six sessions of gains ahead of a key oil inventory report.
Light, sweet crude for May delivery recently traded 66 cents, or 0.8%, lower at $86.18 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 37 cents, or 0.4%, lower at $85.78 a barrel.
Oil prices fell as the dollar strengthened against the euro, making crude futures more expensive to purchase using the European currency. The dollar had backed off of recent highs against the euro recently, but has now strengthened on four consecutive trading days.
"Crude's gone straight up even with the strength in the dollar ... but because the dollar is showing some trending signs, crude is starting to stall a little bit here," said Tom Bentz, a broker and analyst with BNP Paribas Commodity Futures Inc.
The oil market may also need to see the Dow Jones Industrial Average cross 11000 before moving higher, analysts said, as the index has spent the last two days just below that level. That milestone for the index would signal that investors remain confident in the economic recovery, and would give traders who have embraced more-robust oil demand outlooks the upper hand in the market.
Crude futures are also unlikely to probe new highs before the release of weekly oil and fuel inventory data by the U.S. Energy Information Administration at 10:30 a.m. EDT.
Stockpiles have risen in recent reports, and analysts are expecting the EIA to say that oil inventories rose by 1.3 million barrels, according to a Dow Jones survey. Gasoline stocks are seen falling one million barrels, while distillate inventories, including heating oil and diesel, are expected to decline by 1.3 million barrels. Refinery utilization is expected to rise 0.2 percentage point to 82.8% of capacity.
On Tuesday, the American Petroleum Institute, an industry group, reported a 1.1-million-barrel increase in oil inventories, a three-million-barrel drop in gasoline stocks and a 700,000-barrel addition to distillate inventories. Refinery runs were estimated to be 84.7% of capacity.
But the market is likely to remain focused on future oil demand via the strength of the economy, wrote analysts with Tudor, Pickering, Holt & Co. in Houston. Oil prices have risen sharply in the last couple weeks even as oil inventories have swelled and gasoline stocks hit a 17-year high for late March.
"Even with crude oil and key products at/near prior seasonal max, stock/commodity markets (are) not paying much attention to inventory issues," the analysts wrote.
Front-month May reformulated gasoline blendstock, or RBOB, recently traded 0.99 cent, or 0.4%, lower at $2.3384 a gallon. May heating oil traded 1.53 cents, or 0.7%, lower at $2.2530 a gallon.
Write to Brian Baskin at brian.baskin@dowjones.com
